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with Carolyn Dehring Milfoil is an aggressive aquatic invasive species that affects freshwater lakes by altering lake ecosystems and degrading the quality of water recreation activities. Three studies estimating the effect of milfoil infestation on lakefront property values have each found substantial discounts. However, whether based on past or current methods of treatment, the present value of milfoil mitigation/eradication costs are relatively small. One weakness of the previous studies is that milfoil infestation is treated as random. Using the Horsch-Lewis (2009) data, we treat milfoil infestation as endogenous, and find no adverse price effects to lakefront properties from milfoil during the sample period.
with Peter Groothius and Kurt Rockhoff Corporate sponsorship plays an important role in the entertainment business. The question becomes: what influences the value of a sponsorship contract? Empirical analysis of this question is relatively limited because of a lack of complete data on contract values. This is especially true in NASCAR where sponsorship values are generally not released to the public. We analyze a proportional proxy for driver sponsorship value: the value of time on camera. We find that the value of time on camera is influenced by driver performance but also by their experience and, in the case of two drivers, their family name-brand capital. The results confirm that sponsorship value in NASCAR is not only determined by what a driver has done most recently but, to some extent, what their fathers had done before them.
with Ramakrishna Rajasekhar This paper investigates the final bid prices for players during the first three seasons of the Indian Premier League (IPL). Although the IPL imposes a salary cap and other labor-market restrictions, it is anticipated that final bid prices reflect the aggregate value of player productivity statistics, potential leadership skills, and auction characteristics. The empirical analysis follows the methodology used to investigate wage determination in other professional sports. We find that cricketer salaries are influenced by player characteristics and that the marginal values have not been changing during the first three years of the league. We find little evidence for systematic wage discrimination against players who are not Indian nationals. We also find little evidence for systematic differences in average salaries paid across the eight franchises in the league.
with Egle Mazonaite This paper investigates the number of universities a country had ranked in the QS Top 500 World Universities in 2008. While income, population size, and being industrialized all contribute to having more universities ranked, illiteracy is strongly negatively correlated with the number of universities ranked from a particular country. Economic freedom and ethnic fractionalization are both positively correlated with the number of universities a country had ranked in the top 500.
with Mike Ward Internet tools that allow scholars better access to the literature are hypothesized to alter journal referencing patterns and increase scholar research productivity. These hypotheses are tested for economic research using changes in journal availability through access to the JSTOR article archiving service. Our evidence indicates that JSTOR access leads economists to refer more often to JSTOR journals and less often to non-JSTOR journals. Furthermore, JSTOR access increases an institution’s quantity, but not quality, of economic research. Thus, the Internet has the potential to not only increase commercial productivity, but also research productivity, which could increase the rate of economic growth.
with Larisa Mackey This paper explores the impact of multi-car teams on driver wins, total points, and total earnings in the NASCAR Sprint Cup Series for the years of 2005 through 2008. In the earlier years of NASCAR’s history, multi-car teams were rare as the common wisdom was that a multi-car team would have poor chemistry which would negatively impact driver performance. Recently, however, multi-car teams have become more popular. This paper investigates whether multi-car teams experience more success in terms of driver performance and earnings. Using season-level data, we show that multi-car teams generally enjoy a competitive advantage on the track over single-car teams.
with Courtney LaFountain We measure the effect of governance on sovereign creditworthiness, as measured by sovereign credit ratings. Governance may affect the government's ability to raise tax revenue to service its debt, with poor enough governance leading to insolvency. Data for 1996-2005 indicate that countries with better governance have higher probabilities of getting top ratings and that improving governance increases the likelihood of a top rating more for lower income countries than for higher income countries. Governance thus plays a role in reducing the likelihood of default, thereby facilitating countries' access to international credit markets and their financial sector development.
with Dennis Wilson We empirically investigate whether there is any statistically and economically meaningful correlation between the success a nation’s soccer team in the FIFA World Cup Finals and that nation’s real per-capita GDP growth. Using an unbalanced panel of countries from 1950 through 2004, we find that, for certain continents, there are non-trivial correlations between the World Cup finals, World Cup success, and real per-capita GDP growth. In Europe, North America, and South America, real per-capita GDP growth declines by approximately one percentage point in the years during which the World Cup Finals occur. Moreover, we find that in Africa, North America, and South America, the further a nation’s team advances in the month-long tournament the further the decline in real per-capita GDP growth. We estimate the contemporaneous impacts of the 2002 World Cup finals on per-capita income and a counterfactual real per-capita GDP series incorporating the varying levels of success in all of the World Cup finals held during our sample period.
This paper investigates the value of the pole-position over the history of NASCAR. Early in the sport’s history, the pole-sitter enjoyed a considerable advantage over other racers both in terms of the probability of winning a race and in the percentage of a race’s purse won. Over time, however, the probability of the pole-sitter winning a particular race has declined considerably, especially in the so-called modern era of NASCAR during which time the sport has intentionally pursued parity amongst drivers and teams. While the odds that the pole-sitter wins a race have declined over time, the expected value of winning the pole has increased, caused by the increased popularity of NASCAR and the corresponding increase in race purses.
with Dennis P. Wilson This paper provides evidence that the uncertainty of outcome, as measured by various indexes of competitive balance, does pertain to Division IA college football. Using aggregated season attendance in an unbalanced panel representing nineteen Division IA college football conferences from 1978-2004, we find that fans have a propensity to attend in fewer numbers when competitive balance declines. However, there are qualitative differences in the impact of the uncertainty of outcome on attendance to smaller and larger conferences. The results provide empirical evidence of a sufficient condition provided in previous theoretical discussions of conference realignment in college sports.
with Jennifer K. Ashcraft This paper investigates the impact of baseball's reserve clause as it evolved from a \gen- tleman's agreement" to a formal contract stipulation. Using a unique data set describing the salaries of 29 Major League Baseball players during the 1880s, we test whether average salaries, remuneration to marginal product, and the premium paid to a player for changing teams were materially impacted when the reserve clause became binding in 1887. The em- pirical results suggest that average salaries in the sample fell by approximately 10% after the reserve clause, controlling for player attributes and the overall macroeconomy. We also Żnd that the premium for moving to a new team was cut in half after the binding reserve clause was implemented, supporting the invariance principle postulated by Rottenberg (1956). with Giao Nguyen and Salil Sarkar This paper investigates the impact of various forms of executive compensation and firm monitoring on agency costs as measured using the stochastic frontier technique. After relating market value for 1,043 firm-year observations to a number of standard covariates in a stochastic frontier framework, the resulting one-sided inefficiency term is interpreted as a proportional proxy for firm-specific agency costs. Following Battese and Coelli (1995) firm-specific agency costs are related to a variety of additional covariates including firm governance structures, firm liquidity, information asymmetry, and various forms of executive compensation. Consistent with agency theory, it is found that cash compensation tends to increase agency conflict while restricted stock incentives and executive stock options tend to lower it. Moreover, firms with high liquidity and low information asymmetry exhibit a lower degree of agency cost.
This paper provides empirical estimates the optimal size of Division IA football conferences, utilizing data describing conference football revenues and expenditures from the 1990s and early 2000s. The data suggest that the conference size that maximizes football may be approximately twelve teams, consistent with the recent trend in Division IA football towards twelve team conferences. The results suggest that the NCAA’s accommodation of conference realignment supports previous conclusions that the organization operates as a cartel that protects the profit-potential of its membership. Furthermore, the results support intuition provided by other authors about the causes and effects of conference realignment.
with Dennis P. Wilson This paper presents an empirical investigation into the monetary effect of a football probation and associated penalties, including lost scholarships and post-season bans, on the revenues and expenditures on collegiate sports. Using data from 106 Division IA football programs from 1996-2000, we test the impact of a probation on men’s football revenues and expenditures and find little evidence of a monetary effect. Extending the analysis to men’s and women’s basketball and aggregated men’s and women’s non-revenue sports, we find evidence that suggests women’s sports, and to a lesser extent men’s non-revenue sports, suffer reduced resources during a football probation and associated penalties. We provide possible explanations for this perhaps unintentional consequence of NCAA enforcement in collegiate football. New Stadiums and Concession Prices: Evidence from Professional Football and Baseball This paper investigates the impact of new stadiums on the prices of certain concessions. The question is important given the heated debate over public subsidies for stadium construction. Anti-subsidy activists express concern that increased prices caused by a new stadium might preclude attendance for some who help finance the stadium's construction. However, it is important to identify whether prices increase because of increases in attendance, whether caused by a new stadium or for other reasons such as team quality, or because of the new stadium alone. Using data describing professional football (NFL) and baseball (MLB) teams from 1991 through 2001, it is shown that concession prices tend to increase after a team moves into a new stadium predominantly because of attendance increases. Only in a few cases in either sport can price increases be attributed to the new stadium alone. Ultimately, the impact of the price changes on the total cost of attendance is marginal, yet the impact on team revenues can be substantial.This paper investigates the impact of new stadiums on the prices of certain concessions. The question is important given the heated debate over public subsidies for stadium construction. Anti-subsidy activists express concern that increased prices caused by a new stadium might preclude attendance for some who help finance the stadium's construction. However, it is important to identify whether prices increase because of increases in attendance, whether caused by a new stadium or for other reasons such as team quality, or because of the new stadium alone. Using data describing professional football (NFL) and baseball (MLB) teams from 1991 through 2001, it is shown that concession prices tend to increase after a team moves into a new stadium predominantly because of attendance increases. Only in a few cases in either sport can price increases be attributed to the new stadium alone. Ultimately, the impact of the price changes on the total cost of attendance is marginal, yet the impact on team revenues can be substantial.
with Trisha L. Bezmen The United Nations has made access to Information and Communication Technology (ICT) a primary objective for the developing world. Several policies have been implemented to transfer technology from the developed to the developing world, specifically to increase Internet access. Unfortunately, there is little direct evidence that Internet usage has a positive impact on national income. This paper investigates the impact of Internet usage on national income using a cross section of 84 countries from 1999 and 2000. The results indicate that national income has a positive impact on the number of Internet users and the number of Internet users has a positive influence on national income. Using a restricted sample of 22 African countries, it is shown that attempts to exogenously increase an average African countrys access to Information and Communication Technology (ICT), specifically through an increased number of personal computers, are expected to have minimal impacts on national income in the short-run. The estimation results suggest that the short-run net benefits of technology grants are most likely negative, although long-run benefits could be positive.
This paper investigates the impact of lowered BAC limits on alcohol related traffic fatalities. Unlike previous studies that find significant reductions in traffic fatalities after legal limits are reduced, this paper shows that once controlling explicitly for enforcement efforts and the severity of penalties the impact of lowered BAC limits is insignificant. This study is important because national legislation was passed in 2000 requiring all states to have a legal limit of 0.08 BAC by 2004. At the time, proponents of the legislation claimed an estimated 600 lives would be saved nation-wide because of the new legal limits. This study shows that this estimate was most likely overstated.
with Robert J. Sonora
In recent years, several public policy initiatives have aimed at the increasingly common red light violation. Policies ranging from public service announcements, increased penalties for red light violations and, most strongly debated, the use of red light cameras to ensure near perfect enforcement of red light violations, have been employed across the country. However, these initiatives have failed to reduce the number of red light violations to zero, a situation that has frustrated public policy crafters. This paper suggests that while some drivers may purposefully violate red lights, there are natural conditions under which drivers find themselves involuntarily running red lights. If drivers involuntarily run red lights, the traditional policy tools to combat illegal behavior will be less effective. We show that past public policy initiatives may have focused on an inappropriate source of red light violations, thereby having less success than their proponents had hoped.
Time Series Analysis of Market Structure Previous research on market structure concludes that it is difficult to empirically distinguish between various forms of imperfectly competitive behavior. In this paper, we demonstrate that this `identification' problem can be overcome by analyzing the dynamic relationship between output of firms in a market. Specifically, if output levels are characterized by stochastic trends then collusive firms will exhibit positive long-run cointegration while firms engaged in non-cooperative competition will exhibit negative cointegration. The methodology is applied to OPEC, which has been the subject of numerous analyses concerning its market structure. We find that OPEC has indeed behaved as an output-based cartel (a collusive market structure). A natural extension of the empirical methodology provides interesting insight to the disequilibrium dynamics associated with OPEC's cartel behavior. ORPHANS
Congressional Elections of 1996 Claims of incumbency bias in election results have been supported in previous research, but not investigated in the context of campaign fund-raising. Using a simple measure of bias in campaign contributions, I find that the bias in fund-raising for the Congressional elections of 1996 was towards challengers. The observed increase in fund-raising activities by incumbents reflects a rational response to the bias towards challengers in raising campaign contributions. These results indicate that campaign fund-raising is more competitive than general opinion may suggest.
In this paper I introduce a suburban market that surrounds the core circular market developed by Salop (1979). The interesting result is that firms which locate in the original city only lead to higher social expenditure than if they have two locations. Furthermore, firms are not guaranteed to make zero or positive profits if they remain in a single location whereas they are guaranteed to make zero profits if they expand to locate in both markets.
In this paper I investigate why some U.S. colleges offer positive tuition subsidies while others do not. I develop a model in which students face uncertainty in the quality of education at a school and schools in the quality of students that attend the school. These uncertainties help explain why different tuition subsidies exist. An empirical investigation of 1115 U.S. colleges in 1994 shows that students typically underestimate the quality of education they receive and that schools typically overestimate the ability of students.
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